GLOBAL MARKETS: Asian shares fell as soaring borrowing costs deepened worries that Spain might need a bailout, while Greece appeared unlikely to meet conditions of its aid package. European shares were set to fall for a fourth straight session on mounting concerns that Spain, the euro zone's fourth-largest economy, might need a full international bailout and Greece would struggle to meet the terms of its aid package. Wall Street stocks fell on Tuesday, hit by signs the euro zone crisis is worsening and evidence that Europe's slowdown is hurting U.S. companies, including bellwether UPS.

Spain feels debt heat, Greece way off bailout terms
Spain paid the second highest yield on short-term debt since the birth of the euro at an auction on Tuesday, and EU officials said Greece had little hope of meeting the terms of its bailout, casting fresh doubt on its future in the euro zone.

Moody's cuts outlook on EU stability facility to negative
Moody's Investors Service has changed the outlook on the provisional (P)Aaa long-term rating of the European Financial Stability Facility (EFSF) to negative from stable, a blow to a fund that was supposed to backstop struggling EU members.

FOREX: The euro hovered near two-year lows in Asia as investors gave it and risk currencies a wide berth after a sell-off in global stocks amid mounting fears that debt-ridden Spain will need a bailout.

FOREX-Euro hovers near 2-year lows as Spanish worries unabated
TOKYO, July 25 (Reuters) - The euro hovered near two-year lows on Wednesday in Asia as investors gave it and risk currencies a wide berth after a sell-off in global stocks amid mounting fears that debt-ridden Spain will need a bailout.
Spiking Spanish borrowing costs are fuelling fears for the region's stability, and European Union officials said Greece had little hope of meeting the terms of its bailout.

CME members get 60-day extension for new margin rules
The CME Group has been granted a second extension by the U.S. Commodity Futures Trading Commission before imposing controversial new rules that will increase margins for its non-hedge, or spec, members, a CME spokesman said on Tuesday.

GRAINS: U.S. new-crop soybeans edged lower, falling for a third straight session with forecasts of rain in parts of the Midwest offering some relief as the crop enters its yield-determining phase.

Rains give mild relief to US drought, grain prices tumble
Welcome rains provided some relief to heat-stressed cities and worried farmers in the U.S. Midwest on Tuesday, but reports of failed crops, wildfires and other fallout from the worst U.S. drought in more than 50 years tempered any optimism.

Pakistan starts to speed up wheat sales
HAMBURG, July 23 (Reuters) - About 40,000 tonnes of Pakistani wheat has been sold in the last two weeks to buyers in countries including Indonesia, Malaysia and East Africa, traders said on Monday.
The deals show Pakistan is starting to speed up wheat sales following a slow start to its export season which starts around late May.

China-Canada oil deal shows more U.S. drilling needed -Senator

Republican senators will unveil new energy legislation on Thursday that will help battle a new move by China to tap North American energy resources, Senator John Hoeven said.

OIL: Brent hovered around $103 a barrel as worries about oil demand from the troubled euro zone and the United States offset any gains to prices sparked by concerns about oil supply from the Middle East.

Euro Coal-Prices steady, more China defaults seen
LONDON, July 24 (Reuters) - Physical prompt coal prices were little changed on Tuesday, supported by oil's rise towards $104, but were set to come under renewed downward pressure in coming weeks because of another wave of Chinese defaults and forced price re-negotiation, traders and utilities said.
"I thought the South African price had reached a floor of $85 a tonne but with China, the situation with defaults has become so much worse in the past two weeks, prices have got to fall further," one Asia-based trader said.

Coal output to shrink as mining margins in retreat
LONDON, July 24 (Reuters) - Global coal output is set to shrink over the next year or two as miners grapple with a combination of low prices driven by cheaper alternatives, weak demand, and cost and currency headwinds.
Output has already begun to fall, but so far only by a couple of millions of tonnes - a tiny fraction of the global annual seaborne coal trade of 750 million. Analysts and industry executives say cuts could soon reach dozens of millions of tonnes to bring supply in line with weaker demand in China and Europe.

METALS-Copper steadies from one-month low; debt woes weigh

SINGAPORE, July 25 (Reuters) - London copper fell to a one-month low on Wednesday as renewed worries over Greek and Spanish sovereign debt hit risk appetite and curbed expectations of metals demand, before erasing losses alongside the euro to trade little changed.
Soaring borrowing costs for Spain and concerns that Greece may not meet its bailout terms fueled jitters about the euro zone, knocking fragile confidence after a report showed an improving economic picture in China on Tuesday.

PRECIOUS-Gold edges higher for 2nd day, stimulus hopes support
SINGAPORE, July 25 (Reuters) - Gold inched higher on Tuesday, extending gains into a second straight session as poor economic data from both sides of the Atlantic helped raise hopes for further monetary stimulus measures, which would increase gold's appeal as an inflation hedge.
The latest figures showed that the U.S. and euro zone economies were still struggling in July, and a Wall Street Journal reported that the U.S. Federal Reserve was close to taking new steps to boost U.S. economic growth.

PRECIOUS METALS: Gold inched higher, extending gains into a second straight session as poor economic data from both sides of the Atlantic helped raise hopes for further monetary stimulus measures, which would increase gold's appeal as an inflation hedge.

Iron Ore-Prices decline further as gloomy outlook bites
SHANGHAI, July 25 (Reuters) - Spot iron ore prices extended their losing streak to touch an eight-month low, as free-falling prices and a gloomy demand outlook kept Chinese buyers at bay.
"I think the reality is that China can't be expected to keep growing at 200 kilometres per hour and carry the global economy," said Jonathan Claesen, a trader with Metalmin which is a major supplier of minerals to China.

Baltic index down; capesize, panamax rates lower
July 24 (Reuters) - The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry commodities, fell on Tuesday as rates for both capesize and panamax vessels softened.
"We continue to expect the oversupply of tonnage to keep dry bulk rates under pressure over the near-to-intermediate-term, with the high probability of near-term restructurings potentially keeping equities under pressure," Wells Fargo analyst Michael Webber said in a weekly note.

COMMODITIES-Broad selloff as Europe crisis widens; oil bucks trend
NEW YORK, July 24 (Reuters) - Oil closed up on Tuesday for the first time in three days on China's encouraging manufacturing data, while other commodities mostly fell as a negative credit outlook for Germany led to fears the euro zone crisis was worsening.
"The risks of escalation of the conflict in Syria, we think, will continue to limit the extent of any bearish sentiment" on oil, ANZ analysts said in a note.

GLOBAL MARKETS-Shares fall on intensifying worry over Spain
TOKYO, July 25 (Reuters) - Asian shares fell and the euro was stuck near multi-year lows against major currencies as soaring borrowing costs deepened worries Spain might need a bailout, while Greece's finances appeared to fall short of terms conditional to its aid.
"With so much risk to go around, markets have been making sharper and sharper distinctions between 'safe haven' and 'risky' assets," said Michael Gavin, head of global macro and emerging market strategy at Barclays Capital in a report.

China PMI improves, commodity demand to lag
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
LAUNCESTON, Australia, July 24 (Reuters) - It is perhaps a reflection of the parlous state of the global economy that what is essentially a negative reading on China's industrial strength is taken by the market as a positive signal.
The HSBC Flash Purchasing Managers' Index remained below the 50-level in July, indicating activity in the world's largest manufacturer contracted for a ninth straight month.

Falling output, old fields spur North Sea tax fight
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, July 24 (Reuters) - UK government revenues from oil and gas production will almost halve over the next four years, as falling output as well as investment in new fields and the cost of decommissioning old ones cut into tax receipts.
Shrinking revenues highlight the rapid depletion of North Sea oil fields, but also the growing costs of plugging and abandoning old wells that are no longer productive as the province becomes more mature.

OIL-Oil up on China data, but Europe concerns limit rise
NEW YORK, July 24 (Reuters) - Oil edged up on Tuesday in choppy trading as signs that China's manufacturing sector was improving lent support while weak euro-zone data and the region's spreading debt crisis limited gains.
"The preliminary purchasing managers' indices from the eurozone, on the other hand, remain persistently at recession level and are thus likely to counter any stronger price recovery."

POLL-U.S. crude stocks forecast down on lower imports
July 24 (Reuters) - U.S. crude oil stockpiles are forecast to have fallen last week for a fifth straight week, due to lower imports, an expanded Reuters poll of analysts showed on Tuesday.
Commercial crude stocks are projected down 700,000 barrels for the week ended July 20, with eight of 12 analysts expecting a draw, one forecasting no change and the others a build.

Hong Kong's Li Ka-shing to buy UK gas assets for $1 bln
HONG KONG, July 25 (Reuters) - A group of companies controlled by Hong Kong billionaire Li Ka-shing has agreed to buy UK gas company Wales and West Utilities for 645 million pounds ($1 billion), the latest acquisition by the tycoon that will boost his gas portfolio in Britain.
Octogenarian Li has been expanding his business empire by buying into regulated infrastructure and utilities assets in developed countries, especially Britain -- which is open to foreign ownership of its infrastructure assets.

NATURAL GAS-US natgas futures gain for 5th day, front at 7-mth high
NEW YORK, July 24 (Reuters) - U.S. natural gas futures ended higher on Tuesday for a fifth straight day, with bullish technicals, still-warm forecasts and estimates for another light weekly inventory build driving the front contract to a fresh seven-month high.
"Sentiment is stacking up on the bullish side which is emboldening new buyers. Computer model runs suggest there is additional heat coming, but there are concerns about coal-to-gas switching - it's becoming less enticing with these economics," Gelber & Associates analyst Pax Saunders told Reuters.

EURO COAL-Prices steady, more China defaults seen
LONDON, July 24 (Reuters) - Physical prompt coal prices were little changed on Tuesday, supported by oil's rise towards $104, but were set to come under renewed downward pressure in coming weeks because of another wave of Chinese defaults and forced price re-negotiation, traders and utilities said.
"I thought the South African price had reached a floor of $85 a tonne but with China, the situation with defaults has become so much worse in the past two weeks, prices have got to fall further," one Asia-based trader said.

Malaysian Resources Corp (MRCB) CEO Datuk Mohamed Razeek Md Hussain Maricar has resigned from his position to join another organisation. He joined MRCB as COO in June 2009 and was promoted to the post of CEO six months later. (The Sun)

Passenger traffic recorded at airports nationwide in the first six months of the year, grew by 4%. Transport Minister Datuk Seri Kong Cho Ha said, 17.35m were domestic passengers compared with 16.82m last year. There was also a 3.14% increase for international passengers to 15.83m. The KLIA2 would help ease passenger flow and the government is also upgrading several city airports such as in Penang, Ipoh and Sibu. (Bernama)

Axiata, which holds 20% in Idea Cellular, has threatened to claim damages and drag the Indian government to international arbitration. Axiata, whose investments in India are routed through Mauritius, said it plans to initiate international arbitration against the Indian government, using the India-Mauritus bilateral trade agreement, after the Supreme Court cancelled 13 of Idea's licences. "The Supreme Court's decision to cancel 13 of Idea Cellular's licences without compensation and any further actions taken by the Republic of India to execute this decision amount to a clear violation of Axiata's rights under the Mauritius-India bilateral investment treaty," the company said in its June 6 communication to Prime Minister Manmohan Singh, telecom minister Kapil Sibal, external affairs minister SM Krishna amongst others. "If and when Idea Cellular's 13 licences are cancelled, Axiata will suffer further significant losses." In an unrelated development, the home ministry has opposed Axiata's proposal to increase its stake in Idea Cellular on security grounds. The home ministry said that an Axiata subsidiary, Multinet Pakistan operates digital optic network in Pakistan. "Further, the ownership of Multinet Pakistan by a Pak national and routing of traffic through its E-Connect in Karachi need to be considered, from the security point of view while taking a decision in the matter," the ministry of home affairs said. (Economic Times)

Celcom Axiata completed the acquisition of 51% stake in Digital Milestone Sdn Bhd (DMSB), in accordance with the Teaming Agreement on July 3 entered by Celcom and Media Broadcast GmbH. Under the agreement, they are to establish a joint-venture entity and jointly act in relation to pre-bid activities and formulation of bid for the development, supply, commissioning, marketing and operation of digital television transmission infrastructure in Malaysia via a common infrastructure provider. (BT)

Palm oil prices are to remain bullish in the next five months due to the crop-damaging weather in the United States, India's doubling of taxes on refined products and the approaching El Nino phenomenon. In promising a bright outlook for the commodity, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok said: "I don't see anything disastrous coming our way.""Prices are higher now and if the US' drought continues as expected, then there will be more demand for palm oil and prices will go up," he added. (Starbiz)

TH Plantation Bhd (THP) has accepted its major shareholder Lembaga Tabung Haji's (LTH) proposal to inject stakes from two companies for a total of RM535.64m. The move will see the pilgrims' fund increasing its holdings in the plantation company from 58.82% currently, to 70.68%. The related-party transaction will boost THP's plantation landbank by 102% to 90,671 ha and improve the age profile of its palms. Its total planted area of oil palms will also increase from 38.514 ha to 57,407 ha. (Malaysian Reserve)

AirAsia wants to opt out of all joint venture agreements with Malaysia Airlines (MAS). AirAsia decided at a board meeting last week that it would seek to terminate its agreements with MAS soon, according to the source. A termination of the memorandums of understanding (MOUs) between AirAsia Bhd and MAS would effectively wipe out the remnants of the swap deal. Two MOUs were signed on May 2, 2012 whereby one was to focus on the setting-up of a joint venture company to provide aircraft component maintenance support and repair services. Another was for the establishment of a special purpose vehicle by MAS, AirAsia, and AirAsia X to improve value for money and to increase competitiveness through procurement synergies. (BT)

Supermax Corp Bhd is planning to manufacture natural rubber examination and surgical gloves in South America. This will give the group’s products duty-free status within the Mercosul member countries in South America. Supermax is assessing the feasibility of establishing a new glove factory which includes related facilities for processing, packaging and sterilization of gloves. (Financial Daily)

Rainfall across the northern U.S. Midwest over the next 10 days will provide some relief for the drought-stricken corn and soybean crops, but more rain is needed to stem further crop losses, agricultural meteorologists said. The midday U.S. weather outlook turned a little drier for this week, with 60 to 65% of the Midwest expected to get rain versus 80% in an earlier run. U.S. crops are suffering from the worst drought in more than 50 years, which is raising worries about the world's largest food exporter's ability to meet the needs of food processors, livestock producers and ethanol makers. The lack of rain was also drying up waterways and slowing river shipments of commodities to export ports on the Gulf of Mexico. (Reuters)

AXIS REIT Managers Bhd (ARMB) plans to raise RM270m to buy properties in the Klang Valley, Penang, and Johor. ARMB is proposing a placement of 90.8m shares in Axis Real Estate Investment Trust (Axis REIT), to raise funds for the acquisition. This will be the fifth placement for Axis REIT since its listing on the Main Board of Bursa Malaysia in 2005. The placement will increase the unit base by 20% to 544.6m (BT)

Axis REIT Managers Bhd (ARMB), the manager of Axis Real Estate Investment Trust (Axis-REIT), is looking at acquiring seven new properties this year. Its chief executive officer, Steward Labrooy, said the company has secured two properties in Penang, both logistics distribution centres in Bayan Lepas and Prai, for RM107.5m. The company has also entered into sales and purchase agreement to acquire three properties - Emerson facility in Nilai for RM27m as well as Wisma Academy and Annex in Petaling Jaya for RM85m. Labrooy said ARMB is currently under negotiation for six properties worth RM227.78m, of which it expects to complete two by year-end. The properties are a technology centre in Petaling Jaya, two industrial facilities in Port of Tanjung Pelepas, two industrial facilities in Johor and a warehouse in Shah Alam. (Bernama)

Scomi Group Bhd (SGB) has announced its proposed plan to revamp its upstream oil and gas business and part disposal of assets to Scomi Marine Bhd (SMB) for RM1.02bn. The deal will see SGB's stake in SMB rise to 65.6% from 42%. (Malaysian Reserve)

AirAsia X has teamed up with Tune Box, the digital media arm, to offer the in-flight entertainment system, Samsung Galaxy Tab 10.1, onboard all its long-haul destinations. Guests may pre-book on its website for only RM35 one way and also available for rent onboard for RM45. (Bernama)

Johor Port aims to attract more players to Tanjung Bin in its efforts to make it the new business centre for international oil traders in the region. The Finance Ministry had on May 10 this year approved the gazettement of Tanjung Bin as a free industrial zone. ATT Tanjung Bin, a 50:50 JV between Vitol and MISC, was the first company to operate in Tanjung Bin, with the capacity to store almost 1m tonnes. (Bernama)

Petronas Dagangan targets to sell 5bn litres of petrol this year
Petronas Dagangan eyes a total sale of 5bn litres of petrol this year, up 10% from last year, driven by an increase in the number of petrol pump stations. Retail Business Division Senior General Manager Akbar Md Thayoob said the group sold over 4bn litres of petrol last year. "There are 74 stations in the pipeline this year, with half already set up," he told reporters after receiving the documents for a proposed development of a petrol pump station at KM2.95 (Westbound) Plaza Tol Penchala. (StarBiz)

SapuraKencana awards 3 contracts to UAE's Al-Jaber
SapuraKencana Petroleum has awarded three contracts amounting to RM8.5m to United Arab Emirates (UAE)-based Al-Jaber Group's unit Global Process Systems (GPS) to be implemented in Sarawak's offshore in the South China Sea. The contracts are for fuel gas conditioning package, the produced water treatment package and the de-aerator column and vacuum pump skid destined for the Serendah Project, GPS said. The Serendah Project is part of the Phase II Sarawak Gas Development Project - Blocks SK309 and SK311 - being developed by Murphy Sarawak Oil Co Ltd under its Production Sharing Contract (PSC) with Petroliam Nasional, it said. (Malaysian Reserve)

Misif, Mycron Steel raise concerns
The Malaysian Iron and Steel industry Federation (Misif), the association representing downstream steel players, have raised concerns over the government's continued "protection" of Megasteel SB, the financially troubled steel company controlled by Tan Sri William Cheng. Misif said the roughly three-year grace period given to Megasteel to iron out its internal operational and financial woes would expose its members to "a vulnerable survival period". Mycron Steel and Melewar Industrial Group said the industry "is subsidizing" Megasteel by paying far higher prices for the locally produced hot-rolled coils (HRC) products. (Financial Daily)

IHH May Buy More Hospitals After Initial Offer: Southeast Asia (Source:Bloomberg)
IHH Healthcare Bhd. (IHH), which will become the world’s second-biggest health-care provider by market value when it lists today, may buy more hospitals in markets that have unmet demand, Managing Director Lim Cheok Peng said. The company raised 6.3 billion ringgit ($1.98 billion) selling shares in the Kuala Lumpur and Singapore initial public offering, the world’s third-largest this year. Lim said IHH may consider smaller acquisitions to add to its January purchase of a 60 percent stake in the owner of Turkey’s largest hospital group, Acibadem Saglik Hizmetleri & Ticaret AS, which it bought for $826 million in cash and stock. “I don’t think we are prepared to do another major acquisition like Acibadem, but if opportunities arise that fit the overall game plan, we could certainly look at it,” Lim said in a telephone interview.
Kuala Lumpur-based IHH, whose IPO was 132 times subscribed by institutions, already plans to add 67 percent more hospital beds by 2017 to capitalize on populations that are becoming richer and demanding better care. Increasing medical tourism and private health insurance coverage will drive steady demand for beds and services, said B. Kemp Dolliver, head of Asia health- care research at Religare Capital Markets Plc. “It’s going to be a stable business in an unstable world,” Dolliver, who is based in Singapore, said in a telephone interview. “There’s rising affluence in Asia and aging populations, so the demand dynamics look very promising.”

Adventa: Gets revised takeover from Aspion. Adventa Bhd has received a revised takeover offer from Aspion Sdn Bhd, which will exclude the shares in two companies - Sun Healthcare (M) Sdn Bhd and Electron Beam Sdn Bhd. Adventa said on Tuesday the offer price of MYR320.85m, or MYR2.10 per Adventa share, remained unchanged under the revised offer. The glove maker said Aspion had excluded all the shares of Sun Healthcare and the 100% stake in Electron Beam, if held at the completion date of the takeover. Earlier, Adventa had agreed to acquire 2.5 million shares or 100% of Electron Bream for MYR9m. (Source: The Star)

Brahim's: Expands into Japan. Brahim's Food Group has added a feather to its cap by expanding into Japan with the setting up of Brahim's Food Japan Co Ltd. Brahim's Food Japan (BFJ) will be the Japan branch of Brahim's Dewina Group of Companies to facilitate distribution of Brahim's products in Japan. Datuk Ibrahim Ahmad Badawi, executive chairman of Brahim's Dewina Group, said at the launching of the company last Wednesday in Tokyo that 18 products would initially be on offer for the Japanese market. They include Brahim's Malaysian Nyonya Sauce, Brahim's Spicy Tomato Sauce, and Brahim's Chicken Curry with Potatoes. (Source: Business Times)

Padiberas Nasional Bhd (Bernas) said there is no issue of a rice shortage during this festive period. Bernas MD Datuk Bakry Hamzah said the usual demand for rice is 3k-4k tonnes, and supply will be doubled during the festive period with the price remaining the same. “For now, Malaysia has around 500,000 tonnes of rice and this is sufficient to meet demand for six months,” he said. However, glutinous rice is still imported from Thailand and Vietnam according to the prevailing demand. Malaysia’s rice production is still at the same level, with 70% domestic production and 30% imported, he added. (Financial Daily)

Malaysia's debt is still manageable as it is below 55% to the GDP ratio, said Minister in the Prime Minister's Department Datuk Seri Idris Jala. The 53.8% of national debt for last year is within the range as the government continues its efforts to bring down the fiscal deficit level, he said. Citing the Mass Rapid Transit (MRT) project, Idris said though the government had to raise funds for the project, it still managed to keep the debt level below 55%. "We borrow for investments aiming to grow our GDP and economy, hence the debt level will directly reduce. Unlike Greece, they are borrowing a lot of money but the economy is shrinking," he added. (Bernama)

Fitch Ratings said in its latest global cross-sector credit outlook report that ratings with negative credit outlooks had increased across the sovereign (19.8% versus 10.3%), international public finance (48.3% versus 22.4%), financial institution (19.3% versus 10.7%) and insurance sectors (11.1% versus 5.6%) over the past six months, mainly due to the eurozone calamity. (StarBiz)

US stocks fall on concern Europe’s crisis is worsening
US stocks declined, sending the Standard & Poor’s 500 Index down for a second day. Stocks fell as Spain’s 10-year bond yields rose to a euro- era high on bets more of its regions will ask for aid. All 10 S&P 500 groups fell as commodity shares had the biggest losses. McDonald’s (MCD) Corp. slid 2.9% as profit trailed estimates. S&P 500 index lost 0.9% to 1,338.31 as Moody’s Investors Service lowered the outlooks for Germany, the Netherlands and Luxembourg. The Dow Jones Industrial Average dropped 104.14 pts, or 0.8%, to 12,617.32. (Bloomberg)

The US FHFA house price index rose 0.8% mom in May (a revised 0.7% in Apr), almost tripling consensus of 0.3%, whilst on a yoy basis, the measure gained 3.7% (a revised 3.0% in Apr). (Bloomberg)

The US ICSC-Goldman Store Sales index gained 1.0% wow in the 21 Jul week (0.0% in the prior week), whilst on a yoy basis, the gauge gained 3.3% (2.6% in the earlier week). (Bloomberg)

The flash reading of the US manufacturing PMI fell to 51.8 in Jul from a revised 52.5 in Jun, worse than consensus of 52.6 and is the second-lowest rate since Dec 2010. (Bloomberg)

HSBC said its China purchasing managers’ index was on track to rise from 48.2 last month to 49.5 in Jul, which would mark a five-month high, but in remaining below the 50 threshold, factory activity is still contracting at a mild pace. (FT)

The growth rate of Conference Board’s China leading index slowed to 0.1% mom in Jun following 1.1% seen in May. (Bloomberg, Conference Board)

Bank of Japan Governor Masaaki Shirakawa said that Europe's sovereign debt crisis remains the biggest risk to Japan's economy, which is heading for a gradual recovery. (Reuters)

Japan’s Finance Ministry judged its record foreign-exchange intervention last year to have proved effective. (Bloomberg)

A full-blown Spanish bailout can be averted if the European Central Bank starts buying the nation’s bonds in large quantities, according to OECD Secretary General Angel. (Bloomberg)

Eurogroup chief Jean-Claude Juncker stated his "strong commitment" to the eurozone's stability after ratings agency Moody's downgraded the outlook of three members including Germany. (AFP)

Moody's Investor Service lowered the outlook on the EU's bailout fund from stable to negative, after threatening the triple-A credit ratings of three of the eurozone's major guarantors. (Bangkok Post)

There will be fewer job vacancies in Singapore over the next three months, according to a recent survey by recruitment firm Hudson. Just 34.7% of respondents plan to increase headcount, while 57.8% will maintain their headcount for the next quarter. (Channel News Asia)

A shortage of electricity may hamper Indonesia’s plan to ban all raw-ore exports by 2014 and force companies to refine locally, as more than 1 gigawatt of additional capacity may be needed to power the smelters required. (Jakarta Globe)

Vietnam, the world's second-largest rice exporter after Thailand, aims to ship at least 6-7m tonnes of rice a year until 2015, the government said, nearing 2011's record shipment of 7.2m tonnes. (Reuters)

The Eurozone composite Purchasing Managers Index compiled by business research firm Markit was stuck at 46.4 in Jul, according to a preliminary "flash" reading, indicating another month of contraction in activity. (WSJ)

Asia FX By Cornelius Luca - Tue 24 Jul 2012 16:50:54 CT (Source:CME/www.lucafxta.com)
The appetite for risk was limited on Tuesday amid renewed concerns about the Eurozone debt crisis and US economic weakness. The European and commodity currencies resumed losses after failing their attempt to stabilize since late on Monday. The yen remained in demand. The US stock indexes sank and the gold/oil ratio rose. The short-term outlook for the European and commodity currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short only the euro and franc. Good luck!

Overnight
US: The manufacturing PMI slipped to 51.8 in July from 52.5 in June.
US: The Housing Price Index rose 0.8% in May after expanding 0.7% n April.
Canada: Retail sales rose 0.3% in May after falling 0.6% in April.

Today's economic calendar
Japan: Merchandise trade balance for June
Australia: Conference Board Leading Index for May
Australia: Consumer Price Index for the second quarter

Asia Stocks Retreat Fourth Day on Greece, China as Apple Misses (Source:Bloomberg)
Asian stocks fell, with the regional benchmark index headed for a four-day loss, amid concern Europe’s crisis is worsening and as the International Monetary Fund said China’s economy faces significant downside risks. Suppliers to Apple Inc. (AAPL) tumbled after the company reported earnings that missed estimates. Canon Inc. (7751), the world’s biggest camera maker that gets 31 percent of its revenue in Europe, lost 1.9 percent. Samsung Electronics Co. (005930), South Korea’s biggest exporter of consumer electronics, paced losses among Apple suppliers. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, dropped to the lowest since 1980 as the yen rose against its major counterparts after a report showed Japan had an unexpected trade surplus in June. The MSCI Asia Pacific Index dropped 1.1 percent to 112.82 as of 10:35 a.m. in Tokyo. About five stocks dropped for each that rose, with nine out of the 10 groups declining.
“Signals coming out of Greece are not positive in terms of implementing agreements, and so Europe is going to remain a key negative for markets for quite some time to come,” said Stephen Halmarick, Sydney-based head of investment markets research at Colonial First State Global Asset Management, which oversees about $150 billion. “The outlook remains very difficult for major economies and therefore for equity markets.”

Japan Stocks Fall Amid European Debt Crisis Concerns (Source:Bloomberg)
Japanese stocks fell, dragging the Nikkei 225 Stock Average (NKY) lower for a fourth day, as the yen traded near an 11-year high against the euro amid concern Europe’s debt crisis is worsening. Canon Inc. (7751), a camera maker that gets 31 percent of sales in the debt-stricken region, slid 2 percent. Murata Manufacturing Co. (6981), a supplier of smartphone parts for Apple Inc. (AAPL)’s iPhone, tumbled 3.9 percent after profit and sales at Apple missed analysts’ estimates. Sony Corp. (6758), Japan’s No. 1 exporter of consumer electronics, dropped 3.6 percent as the yen rose against its major counterparts after a report showed the country had an unexpected trade surplus in June.
The Nikkei 225 Stock Average lost 1.4 percent to 8,371.29 at 10:15 a.m. in Tokyo. The broader Topix Index slipped 1.3 percent to 708.51. The gauge fell for the 13th time in 14 days and has slumped 19 percent from this year’s highest level in March amid concern Greece won’t meet its debt-reduction targets and as growth slowed in China and the U.S. “The risks of a deeper European recession have increased,” said Matthew Sherwood, Perpetual Investments’ head of investment markets research in Sydney. Perpetual manages about $23 billion. “Clearly Greece is in no position to ask for further concessions considering the pressure on governments in Spain, Portugal and Ireland to cut spending.”

U.S. Stocks Fall Third Day Amid Europe Concern; UPS Slips (Source:Bloomberg)
U.S. stocks slumped, sending the Standard & Poor’s 500 Index down for a third straight day, amid concern Europe’s debt crisis is worsening and after United Parcel Service Inc. lowered its earnings forecast. Equities pared losses amid speculation the Federal Reserve may act to boost growth. UPS, the largest package-delivery company and considered an economic bellwether, tumbled 4.6 percent. AT&T Inc. (T), the biggest U.S. phone company, lost 2.1 percent amid sluggish sales after signing up fewer wireless customers. Apple Inc. (AAPL), the most valuable company, sank 5 percent at 4:51 p.m. New York time on disappointing results.
More than three stocks fell for each rising on U.S. exchanges at 4 p.m. New York time. The S&P 500 slipped 0.9 percent to 1,338.31, paring a loss of 1.6 percent. The benchmark measure decreased 2.8 percent in three days. The Dow Jones Industrial Average lost 104.14 points, or 0.8 percent, to 12,617.32. Volume for exchange-listed stocks in the U.S. was 6.8 billion shares, or about in line with the three-month average.

European Stocks Slide as Germany Outlook Lowered (Source:Bloomberg)
European stocks retreated for a third day as Moody’s Investors Service lowered its credit outlook for Germany and a measure of manufacturing in the Richmond region of the U.S. plunged. Elan Corp. tumbled 11 percent after the results of a study for an Alzheimer’s drug failed to show that patients’ symptoms improved. Royal KPN NV (KPN) fell 7.3 percent as the company cut its dividend forecast by 61 percent after quarterly net income missed analysts’ estimates. Swatch Group AG (UHR) gained 2.3 percent after posting sales and profit that increased. Man Group Plc (EMG) surged 4.1 percent after saying it will double its cost cuts. The Stoxx Europe 600 Index (SXXP) slipped 0.5 percent to 250.57 at the close of trading in London. The gauge slumped 2.5 percent yesterday as concern mounted that Greece will default and more Spanish regions will follow Valencia in seeking a bailout from the country’s central government.
“I would have expected the markets to recover from yesterday’s losses especially since it seems to be quieter on the Spanish front, but the Moody’s news plus the purchasing managers’ index are dragging the markets down,” said Theodore Krintas, managing director of Attica Wealth Management in Athens in a telephone interview.

U.K. Stocks Fall for Third Day as German Debt Outlook Cut (Source:Bloomberg)
U.K. stocks fell for a third day as Moody’s Investors Service cut Germany’s credit outlook and a U.S. manufacturing gauge compiled by the Federal Reserve Bank of Richmond dropped more than forecast. Vodafone Group Plc (VOD) dropped 1 percent after Dutch peer Royal KPN NV cut its dividend forecast. Elan Corp. plunged the most in two years in Dublin after its experimental Alzheimer’s drug failed a trial. Man Group (EMG) Plc rallied 4.1 percent as the biggest publicly traded hedge fund manager said it will double cost cuts and reduce reliance on products with steeper commissions. The FTSE 100 Index retreated 34.64 points, or 0.6 percent, to 5,499.23 at the close in London, extending the three-day drop to 3.8 percent. The gauge has still climbed 4.5 percent from its 2012 low on June 1 as central banks announced measures to support the economy. The broader FTSE All-Share Index lost 0.6 percent today and Ireland’s ISEQ Index sank 1.7 percent.
“Growth in the euro zone is very hard to come by nowadays and this is affecting Germany’s activity too,” said Simon Denham, managing director of Capital Spreads in London. “With question marks over the prized triple-A credit rating of Europe’s largest economy, the markets are likely to remain on the back foot.”

Emerging Stocks Fall for Third Day on Worsening Europe Crisis (Source:Bloomberg)
Emerging-market stocks dropped for a third day as concern Europe’s debt crisis is worsening overshadowed signs of improvement for China’s manufacturing. The MSCI Emerging Markets Index (MXEF) fell 0.3 percent to 909.43 in New York, its lowest close since June 28. Brazil’s Bovespa (IBOV) index also dropped for a third day as Vale SA, the world’s biggest iron-ore producer, fell the most since October. OAO Gazprom, the world’s biggest natural gas exporter, declined 1.8 percent in Moscow, leading energy companies lower on the emerging markets index. Moody’s Investors Service cut the outlook to negative for the Aaa credit ratings of Germany, the Netherlands and Luxembourg, citing “rising uncertainty.” A preliminary reading of manufacturing in China was 49.5 in July, which if confirmed would be the highest since February, according to a purchasing managers index compiled by HSBC Holdings Plc and Markit Economics. A reading under 50 indicates contraction.
“It’s going to take more than one decent Chinese number to heal perceptions of an uncertain global economic outlook,” Alec Young, a global equity strategist at S&P Capital IQ, said in a telephone interview from New York. “Until the growth outlook for Europe and the U.S. becomes clearer, it will be very difficult to get a sustained rally in emerging markets.”

FOREX-Euro steadies after China PMI, Aussie perks up
TOKYO, July 24 (Reuters) - The euro steadied against the yen and the U.S. dollar in Asia, as investors' risk appetite perked up after data showed signs of improvement in China's manufacturing output.
"More bad news has been emerging from Europe, but it's not surprising bad news, just new developments on the same problems," said Masafumi Yamamoto, chief FX strategist at Barclays in Tokyo.

Euro Is Near 11-Year Low Versus Yen Before German Data (Source:Bloomberg)
The euro maintained the longest losing streak in two months versus the dollar before data that may show German business confidence was the weakest since 2010, fueling concern the debt crisis is hurting the region’s economy. The 17-nation currency was 0.2 percent from an 11-year low versus the yen after Italy’s borrowing costs rose yesterday, boding ill for the nation’s debt auctions this week. Moody’s Investors Service lowered the rating outlook for the European Financial Stability Facility to negative from stable. The yen extended gains from yesterday versus all 16 major peers after Japan unexpectedly posted a trade surplus in June. “The economic weakness in Europe is spreading from the periphery to Germany, and I think tonight’s data is going to show further evidence of that,” said Mike Jones, a currency strategist in Wellington at Bank of New Zealand. “Even the engine of European growth is starting to lose steam, and that’s undermining European sentiment. That’s going to keep the euro weak.”
The euro traded at $1.2057 as of 9:19 a.m. in Tokyo from $1.2061 in New York yesterday. Its five-day drop through yesterday was the longest since May. The common currency declined to 94.17 yen from 94.31 yesterday, when it touched 94.12 yen, the lowest since November 2000. The yen was at 78.09 per dollar, having strengthened 1.1 percent over the past five days to 78.18.

Aussie, Kiwi Dollars Fall as Europe Concern Damps Risk Appetite (Source:Bloomberg)
The Australian and New Zealand dollars declined for a fourth day as declines in Asian stocks and concern Europe’s debt crisis is worsening weighed on risk appetite. The South Pacific currencies were weaker against most of their 16 major peers after borrowing costs for Spain and Italy climbed and speculation mounted that Greece may miss debt- reduction targets. The so-called Aussie remained lower against the yen following data that showed Australian inflation slowed in the second quarter, increasing scope for the Reserve Bank to reduce interest rates. “The Aussie looks a bit pricey given the slowdown in the global economy, weaker commodity prices and weaker equity markets,” said Sean Callow, a senior currency strategist at Westpac Banking Corp. (WBC) in Sydney. The Australian and New Zealand dollars “are very sensitive to the deterioration in global risk appetite.”
The Australian dollar slid 0.1 percent to $1.0210 as of 11:46 a.m. in Sydney from yesterday, when it declined 0.4 percent. It touched 79.54 yen, the lowest since June 29, before trading at 79.68, 0.1 percent below yesterday’s close. New Zealand’s dollar, known as the kiwi, fell 0.3 percent to 78.20 U.S. cents. It earlier dropped to 78.08, the lowest since June 14. The currency lost 0.3 percent to 61.13 yen, after touching 61.01, the weakest since June 12.

U.S. Yields Extend Drop to Record Lows as Gross Warns (Source:Bloomberg)
Treasury yields extended their decline to record lows and investors cut bets on inflation as Bill Gross, who runs the world’s biggest bond fund, warned the U.S. economy may stop growing. The difference between yields on 10-year notes and same- maturity Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the debt, narrowed to 2 percentage points. It was the lowest level since January and compares with the average of 2.15 over the past decade. The U.S. plans to sell $35 billion of five-year debt today. Benchmark 10-year yields were as low as 1.3824 percent, the least ever, in early Asia trading. The rate was 1.384 percent as of 9:17 a.m. in Tokyo. The price of the 1.75 percent security due in May 2022 was 103 11/32, little changed from yesterday in New York, according to Bloomberg Bond Trader data.
A report from the Federal Reserve Bank of Richmond implies economic growth is “inching close to 0,” Gross, who is based in Newport Beach, California, at Pacific Investment Management Co., wrote on Twitter yesterday.

Geithner Says Extending Tax Cut for Wealthy Irresponsible (Source:Bloomberg)
U.S. Treasury Secretary Timothy F. Geithner said President Barack Obama is “absolutely committed” to letting tax cuts for the wealthiest Americans expire as scheduled at the end of this year. “If the president were to say now, ‘I’m prepared to extend the taxes for the top 2 percent of Americans,’ it’s a deeply irresponsible thing to do fiscally and economically,” Geithner said in an interview yesterday on the “Charlie Rose” show broadcast on PBS and Bloomberg Television. “It would hurt our credibility. It would leave us with no capacity to address these long-term fiscal problems.” Lawmakers remain deadlocked over long-delayed budget decisions including the future of the George W. Bush-era income tax cuts that expire Dec. 31, automatic spending cuts set to take effect in January and raising the federal debt limit. The end-of-year tax and budget impasse has led to warnings the U.S. could careen off a “fiscal cliff” if Congress doesn’t act.
Geithner said it wouldn’t be “responsible” to push back deadlines including defense sequestration. The cuts are set to occur because talks failed last year on a bipartisan plan to curb the nation’s debt.

Student Loan Debt Tied to U.S. Home Sales Lag, Soss Says (Source:Bloomberg)
U.S. student loan debt totaling more than $900 billion may be hurting home sales, said Neal Soss, chief economist at Credit Suisse in New York. Soss, in a radio interview on “Bloomberg Surveillance” with Tom Keene, said higher requirements for down payments and rising debt of college graduates are preventing younger potential buyers from entering the housing market. “We are trying to migrate towards a much safer underwriting standard, with let’s say 20 percent down payments required,” Soss said today. “It takes a certain amount of time for people to save that up, and the more they’re burdened with student loans the less possible it is for them to accumulate that chunk of liquid capital that allows them to make that.”
Sales of previously owned U.S. homes unexpectedly declined in June to an eight-month low, showing the recovery in residential real estate will take time to develop. In 2011, first-time home buyers, with a median age of 31, fell to the smallest percentage of total home purchasers since 2006, according to data from the National Association of Realtors. Their median income climbed 6.5 percent from 2006 to 2010, compared with a 13 percent gain for repeat buyers, the figures show.

Tourists From Beijing to Buenos Aires Buoy U.S. Exports: Economy (Source:Bloomberg)
For Leon Goldberg, the used clothes piling up at the lost-and-found at the New York Marriott Marquis hotel on Times Square are the latest sign tourists are spending. “People come over with empty suitcases, and we see them leave with full suitcases,” while abandoning their older garments, said Goldberg, the director of sales and marketing at the 1,957-room hotel. Spending by overseas visitors on everything from airfares to hotel stays climbed 8.1 percent over the 12 months ended in May to $13.9 billion, figures from the U.S. Commerce Department show. The increase was almost double the 4.2 percent gain in total exports. Purchases by foreign tourists count as exports, which have been among the mainstays of the three-year economic expansion.
More Latin American and Asian visitors are offsetting a slowdown in trips from Europe, where a weaker euro is making travel to the U.S. more expensive. The pickup in tourism, which Federal Reserve Chairman Ben S. Bernanke called a “bright spot” in the economy, is benefiting companies such as Marriott International Inc. (MAR), City Pass and San Francisco Shuttle Tours and bolstering the labor market.

UPS Cuts 2012 Forecast as Slowing Economy Press Profit (Source:Bloomberg)
United Parcel Service Inc. (UPS), the world’s largest package-delivery company, cut its full-year forecast after a drop in international package sales dragged quarterly profit below analysts’ estimates. Earnings for 2012 may be $4.50 to $4.70 a share, down from a previous projection of $4.75 to $5, the Atlanta-based company said. Second-quarter profit of $1.15 a share trailed the $1.17 average estimate from analysts as sales in the International Package and Supply Chain & Freight businesses fell. UPS, an economic bellwether because it moves goods ranging from financial documents to pharmaceuticals, projects the U.S. economy will expand 1 percent in the rest of the year. Premium- product growth will slow as customers choose cheaper shipping options, Chief Financial Officer Kurt Kuehn said on a call with analysts and investors.
“International volume is particularly weak,” Kevin Sterling, an analyst at BB&T Capital Markets in Richmond, Virginia, said in a telephone interview. “They are not immune from China softening and everything happening in Europe.”

Japan Flags Yen-Sales Impact as BOJ Newcomer Sees Easing Scope (Source:Bloomberg)
Japan’s Finance Ministry judged its record foreign-exchange intervention last year to have proved effective, while a newcomer to the central bank’s board said it may be able to do more to stabilize the currency. The comments highlighted the risk of further action by policy makers to counter gains in the yen, which has climbed for four straight weeks against the dollar. Europe’s debt crisis is undermining demand for Japanese exports and drove the currency to an 11-year high against the euro this week. A Ministry of Finance official involved with international affairs said yesterday that he would challenge any assertion that last year’s intervention wasn’t effective. He spoke on condition of anonymity. Former Nomura Securities Co. economist Takahide Kiuchi, appointed to the Bank of Japan (8301)’s policy board yesterday, said “new forms of monetary easing” may be needed and the central bank could play a bigger role in connection with the currency.
“The likelihood of intervention by the government depends on what happens with the euro-zone sovereign debt crisis,” said David Rea, an economist at London-based Capital Economics Ltd. “Verbal warnings” may persist, he said. The euro fell 0.5 percent to 94.56 yen as of 8:13 p.m. in Tokyo last night. The Japanese currency rose 0.3 percent to 78.15 per dollar.

Japan Unexpectedly Posts a Trade Surplus as Oil Prices Drop (Source:Bloomberg)
Japan posted an unexpected trade surplus in June as lower oil prices contributed to the first drop in imports since December 2009. Imports fell 2.2 percent from a year earlier, resulting in a trade surplus of 61.7 billion yen ($789 million), the Finance Ministry said in Tokyo today. Exports dropped 2.3 percent. The median forecast in a Bloomberg News survey of 29 analysts was for a shortfall of 140 billion yen. Japan’s petroleum imports more than doubled in the fiscal year ended March as the nation closed down nuclear reactors in the aftermath of last year’s Fukushima disaster. While falling oil prices are a boon, weaker global demand and a stronger yen may squeeze exports and cap growth in the world’s third-largest economy. “It’s still not clear whether Japan can sustain a trade surplus,” said Yoshiki Shinke, chief economist at the Dai-Ichi Life Research Institute in Tokyo. “There’s no clear sign of a recovery in exports as the European economy remains weak and China’s growth is slowing.”

New BOJ Board Members Signal Willing to Mull More Easing (Source:Bloomberg)
The Bank of Japan (8301)’s two new board members signaled their willingness to consider fresh forms of monetary easing to help end more than a decade of deflation. The central bank may need to consider “new forms of monetary easing” as it’s unclear whether the BOJ’s 1 percent inflation target can be reached, Takahide Kiuchi told reporters in Tokyo today after his appointment. Takehiro Sato, also starting today, said buying foreign bonds would be one option. The two former economists are joining the BOJ as it struggles to generate inflation and deal with a strengthening yen threatening exporter profits. The central bank, which has kept interest rates near zero since October 2010 and has an asset-buying program aimed at fueling private demand, has forecast that consumer-price increases will stay below its 1 percent goal for the next two years.
“I don’t think the two new members will drastically change monetary policy but when votes are split, they are likely to support easing,” said Shinichiro Kobayashi, a senior economist at Mitsubishi UFJ Research and Consulting Co. “If the yen appreciates further and stocks continue to decline, the BOJ will probably have to bolster stimulus.” The yen traded at 94.62 per euro at 10:52 a.m. in London today, after rising to 94.24 yesterday, the strongest since November 2000. The Japanese currency traded at 78.19 per dollar, after yesterday appreciating above 78 for the first time since June 4. The Topix Index of Japanese shares fell to the lowest level in more than a month today.

Korean Won Falls, Bond Yields Drop to Record-Low on Europe Woes (Source:Bloomberg)
South Korea’s won weakened and government bonds rose, sending yields to all-time lows, on concern Europe’s debt crisis will slow global economic growth. The Kospi (KOSPI) Index of shares dropped 1.6 percent after estimates by Markit Economics showed yesterday that euro-area services and manufacturing output contracted for a sixth month in July. South Korean consumer confidence dropped to a five- month low in July, central bank figures showed today. The Finance Ministry said in a report to parliament yesterday that conditions are deteriorating in the global economy. “Europe’s weak manufacturing data and stocks declining are putting downward pressure on the won,” said Jeon Seung Ji, a Seoul-based currency analyst for Samsung Futures Inc. “Steep declines in the won may be limited as investors short the euro and buy the won.” A short position is a bet that a currency will decline.
The won fell 0.6 percent to 1,153.15 per dollar as of 9:15 a.m. in Seoul, according to data compiled by Bloomberg. It touched 1,153.24 earlier, the weakest since July 13. The currency’s one-month implied volatility, a measure of exchange- rate swings used to price options, advanced 14 basis points, or 0.14 percentage point, to 8 percent. The yield on the 3.25 percent bonds due June 2015 fell five basis points to 2.78 percent, Korea Exchange Inc. prices show. Three-year debt futures rose 0.16 to 106.27 and the one-year interest-rate swap declined three basis points to 2.76 percent.

Korea’s Consumer Confidence Falls to 5-Month Low on Europe (Source:Bloomberg)
South Korean consumer confidence dropped to the lowest level in five months as officials cautioned that a protracted European debt crisis is hurting the growth outlook for Asia’s fourth-largest economy. The sentiment index was at 100 in July, down from 101 in June, the Bank of Korea said in an e-mailed statement today. A reading of 100 indicates there are an equal number of optimists and pessimists. Growth momentum is weak and the global outlook is worsening, the Finance Ministry said in a report to parliament yesterday. South Korea’s economy probably expanded 0.5 percent in the second quarter from the previous three months, when it grew 0.9 percent, according to 13 economists surveyed by Bloomberg News before data due tomorrow. “We wake up every morning with more bad news about the economy,” said Yoon Yeo Sam, a fixed-income analyst at Daewoo Securities Co. in Seoul. “It’s hard to consume or invest when the future looks gloomy.”
South Korea’s won weakened 0.6 percent to 1,152.75 per dollar at the 9 a.m. open in Seoul, according to data compiled by Bloomberg. The Kospi Index fell 1.9 percent.

Spain Debt Costs Seen Unjustified in Berlin Crisis Talks (Source:Bloomberg)
German Finance Minister Wolfgang Schaeuble and his counterpart from Madrid said Spain’s borrowing costs don’t reflect the strength of its economy as they pledged to work toward deeper integration to fight the debt crisis. “The current levels of interest rates on sovereign debt markets don’t correspond to the fundamentals of the Spanish economy,” Schaeuble and Spanish Economy Minister Luis de Guindos said after meeting in Berlin yesterday in a joint statement that also praised Spain’s deficit-cutting efforts. Spain’s bank bailout and agreements made among European leaders at the end of June to build a so-called banking union should be implemented “quickly,” they said. Schaeuble starts his three-week vacation today, while de Guindos visits Paris for talks with his French counterpart, Pierre Moscovici.
Spanish 10-year bond yields surged to a euro-era record of 7.64 percent yesterday, prompting policy makers to deny an international bailout was being prepared for the euro region’s fourth-largest economy. After taking on as much as 100 billion euros ($121 billion) of bailout loans to aid banks, Spain’s government is struggling to maintain access to markets.

Hungary’s IMF Talks Create July Rate-Cut Room: Officials (Source:Bloomberg)
Hungary held off on cutting the European Union’s highest benchmark rate, opting for caution amid concern about inflation and possible delays in loan talks with the International Monetary Fund and the European Union. The Magyar Nemzeti Bank kept the two-week deposit rate at 7 percent today for a seventh month, matching the forecast of 20 economists in a Bloomberg survey. One expected a cut to 6.75 percent. The Monetary Council backed keeping rates on hold with a “substantial majority’ after considering a quarter-point cut in the benchmark rate, Governor Andras Simor said at a press conference in Budapest today. The country’s risk perception and inflation outlook ‘‘warrant a cautious policy stance,” rate-setters said in a statement. A rate cut would require a “persistent” fall in the risk premium and an improvement in the inflation outlook, the policy makers said.
Central bankers have signaled divisions on when to start easing borrowing costs. While some have said the start of aid talks offers a chance to cut the main rate as early as this month to help growth as the economy sinks into its second recession in four years, others have warned that easing too early may erode the bank’s credibility.

Germany Pushes Back After Moody’s Lowers Rating Outlook (Source:Bloomberg)
Chancellor Angela Merkel’s government said Germany will remain Europe’s haven during the financial crisis, pushing back against Moody’s Investors Service’s decision to lower the outlook on the country’s top credit rating. The risks in the euro zone are “not new” and Germany remains “in a very sound economic and financial situation,” the Finance Ministry said. In counterpoint to Moody’s, it cited the verdict of financial markets that have rewarded Germany with record low borrowing costs. “Germany will, through solid economic and financial policy, defend its ‘safe haven’ status and continue to responsibly maintain its anchor role in the euro zone,” the Berlin-based ministry said in an e-mailed statement. “Together with its partners, it will do everything to overcome the sovereign debt crisis as rapidly as possible.”
Euro-area bonds fell today after Moody’s lowered the outlook to negative for the Aaa credit ratings of Germany, the Netherlands and Luxembourg. Moody’s cited “rising uncertainty” over Europe’s debt crisis. It left Finland as the only country in the 17-nation euro region with a stable outlook for its top ranking.

Spain Edges Toward Rescue as Regions Aided: Euro Credit (Source:Bloomberg)
Spain’s bailout of its regions risks pushing the nation closer to a full international rescue after investors charged the nation more to borrow for five years than for a decade, threatening its access to debt markets. Spain’s five-year borrowing costs briefly rose above 10- year yields today, and traded 5 basis points below the 7.57 percent rate on benchmark 10-year debt at 11.30 a.m. in Madrid. Bonds issued by Catalonia continued to fall after the region said it may tap the government’s rescue fund. “It’s almost a waiting game now until they seek a sovereign bailout,” Lyn Graham-Taylor, a fixed income strategist at Rabobank in London, said in a telephone interview. The regional bailout plan was “the straw that broke the camel’s back,” he said.
Economy Minister Luis de Guindos will visit Berlin today for crisis talks with German counterpart Wolfgang Schaeuble. After taking on as much as 100 billion euros ($121 billion) of bailout loans to aid banks, the risk for Prime Minister Mariano Rajoy’s government is that the additional burden of helping regions pushes bond yields to unaffordable levels.

Hollande Transaction Tax Drives Investor Quest for Loopholes (Source:Bloomberg)
French President Francois Hollande’s transaction tax is set to take effect Aug. 1. Not all investors will be paying it. To escape the tax, many institutional investors will turn to so-called contracts for difference, or CFDs, offered by prime brokers that let them bet on a stock’s gain or loss without owning the shares. Traders have used it successfully to skirt the U.K.’s stamp duty. “We’ve never purchased U.K. stocks without using a CFD,” said Fabrice Seiman, co-chief executive officer of Lutetia Capital, a merger-arbitrage fund in Paris that oversees $100 million. “Now we’ll do the same for French stocks. It is individual investors who are going to pay.”
France will become the first European country to impose a transaction tax on share purchases, including high-frequency trading and credit default swaps. The levy, aimed at curbing market speculation, will be paid on transactions involving 109 French stocks with market values of more than 1 billion euros ($1.2 billion), including Pernod Ricard SA and Vivendi SA. (VIV) The U.K., home to Europe’s biggest financial center, has a stamp duty while opposing a transaction tax. German Chancellor Angela Merkel said on June 22 that she and the leaders of France, Italy and Spain agree on the need for such a levy. The other countries have yet to put one in place. Investors buying U.K. shares pay a stamp duty of 0.5 percent on their purchase.

ITS CPO export down 14.25% to 1,026,153 tonnes for the period of 1~25 Jul 2012.
SGS CPO export down 18.6% to 986,829 tonnes for the period of 1~25 Jul 2012.

Soybean futures post 2nd straight day of sharp losses (Source:CME)
Soybean futures posted sharp losses again today, with the August through January contracts around 50 cents lower while farther deferred futures ended 20 to 40-plus cents lower. Despite the sharp losses, futures closed well off their session lows as the first five contract months traded down the 70-cent daily limit intra-day.Parts of the northern and eastern Corn Belt got precip overnight and throughout the morning as rains slid over the top of the high pressure ridge centered over the central Corn Belt. That gave traders a "reason" to actively take profits as the rains are timely with beans flowering, setting pods and filling pods. Additional precip chances are expected through Thursday. But futures were able to come well off session lows into the close as some private forecasters reduced rain chances in the five-day outlook.

Soybean Complex Market Recap (Source:CME)
August Soybeans finished down 49 1/4 at 1649 1/4, 57 off the high and 20 3/4 up from the low. November Soybeans closed down 52 3/4 at 1569 1/2. This was 17 1/4 up from the low and 58 1/2 off the high. August Soymeal closed down 13.2 at 509.8. This was 14.8 up from the low and 12.8 off the high. August Soybean Oil finished down 2.17 at 51.58, 2.21 off the high and 0.25 up from the low. August soybeans traded sharply lower into the close but managed to claw their way back from a limit lower move. August soybean meal and soybean oil also traded lower on the day. Traders took profits for the second day in a row following a sharply lower overnight session. Storm systems passed through Wisconsin, northern Illinois, northern Indiana, and Ohio today which most likely benefited soybean growth during pod-setting. The western Corn Belt saw above normal heat today and missed showers causing further stress to soybean crops. The 6-10 weather outlook shows another ridge setting up next week which will push heat into the Central Midwest again. The eastern Corn Belt may see an increase in precipitation but accumulation is expected to be light. Overall, the market feels very uncertain about the forecast going forward. Outside markets turned extremely negative today as stocks traded lower for the 2nd day in a row and the US Dollar move sharply higher.

VEGOILS-Palm oil hits five-week low on U.S. rain forecasts
SINGAPORE, July 24 (Reuters) - Malaysian crude palm oil futures dropped to the lowest in five weeks extending losses from the previous day as forecast for rains in the U.S. Midwest improved production outlooks for soybeans.
"Prices are reflecting macroeconomic risk aversion but technically palm prices are terribly oversold," said a trader with a local commodities brokerage in Malaysia.

China PMI improves, commodity demand to lag
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
LAUNCESTON, Australia, July 24 (Reuters) - It is perhaps a reflection of the parlous state of the global economy that what is essentially a negative reading on China's industrial strength is taken by the market as a positive signal.
The HSBC Flash Purchasing Managers' Index remained below the 50-level in July, indicating activity in the world's largest manufacturer contracted for a ninth straight month.

Corn, Soybeans Decline as Rains May Ease Stressed U.S. Crops (Source:Bloomberg)
Corn and soybeans fell for a third day on speculation rains from thunderstorms passing through the U.S. Midwest may bring some relief to parched crops, improving supply prospects in the world’s largest grower. Corn for December delivery lost as much as 0.9 percent to $7.71 a bushel on the Chicago Board of Trade, and was at $7.73 at 8:34 a.m. in Singapore. Futures jumped to a record $8 July 23. For the next two weeks, passing thunderstorms may bring some showers to the drought-parched Midwest. The region will probably still lag behind the normal amount of rainfall, said Joel Widenor, co-founder of Commodity Weather. Temperatures are expected to remain 5 to 8 degrees above normal throughout the region during the period, he said in a note to clients yesterday.
“Showers in the northern U.S. corn belt have eased some weather concerns,” Luke Mathews, a commodity strategist at Commonwealth Bank of Australia, said in a report today. “However, severe drought conditions persist across most production regions. The USDA is expected to substantially cut its U.S. production next month given the ongoing decline in crop conditions.” Twenty-six percent of U.S. corn and 31 percent of soybeans were in good or excellent condition as of July 22, the lowest for the date since 1988, the U.S. Department of Agriculture said July 23. Soybeans for November delivery declined as much as 2.1 percent to $15.36 a bushel, the lowest price for the most-active contract since July 13. Futures, which surged to a record on July 23, are on course for the biggest three-day loss since June 1. Wheat for September-delivery slipped as much as 1.9 percent to $8.625 a bushel in Chicago, before trading at $8.6425.

U.S. Corn Crop Forecast 13% Below USDA Estimate by Cekander (Source:Bloomberg)
Newedge USA LLC, the third-largest U.S. futures brokerage, cut its estimate for the nation’s corn production after conditions deteriorated for a seventh straight week in the world’s largest grower. Futures pared losses. The harvest will probably drop to 11.327 billion bushels (287.7 million metric tons) in the year beginning Sept. 1, smaller than an 11.8 billion bushel estimate last week and the lowest in six years, said director of grain research Dan Cekander, who correctly predicted in March that soybeans will trade at the most expensive level relative to corn since 2010. Without increased rainfall, output may be smaller, he said. Newedge’s estimate is 13 percent below the 12.97 billion bushels predicted by the U.S. Department of Agriculture on July 11 and 23 percent below the government’s earlier forecast for a a record 14.79 billion bushels from the most acres since 1937.
Cekander joins Damien Courvalin from Goldman Sachs Group Inc. in cutting his estimate. The drought that prompted the government to declare almost 1,300 counties in 29 states as natural-disaster areas, may cause an 8 million ton global shortage, according to Commonwealth Bank of Australia.

Crop Prices Extend Declines as Soybeans Tumble for Third Day (Source:Bloomberg)
Crop prices extended their declines with soybeans dropping for a third day on the Chicago Board of Trade as rains were forecast for parts of the U.S. Midwest. Soybeans fell 1.9 percent to $15.395 a bushel, bringing the three-day loss to 8.7 percent, after declining to $15.38, the lowest since July 13. Wheat dropped 1.6 percent to $8.645 a bushel and corn declined 0.9 percent to $7.7125 a bushel. Soybean meal slumped 2.7 percent to $457 per 2,000 pounds. Rain may fall in parts of Iowa and Illinois this week and next, and the Midwest might get showers in the next 11 to 15 days, reducing severe moisture deficits from the most-severe drought since 1988, Commodity Weather Group LLC in Bethesda, Maryland, said in a report.

Europe Heat Wave Wilting Corn Adds to U.S. Drought (Source:Bloomberg)
Heat waves in southern Europe are withering the corn crop and reducing yields in a region that accounts for 16 percent of global exports at a time when U.S. drought already drove prices to a record. Temperatures in a band running from eastern Italy across the Black Sea region into Ukraine reached 35 degrees Celsius (95 degrees Fahrenheit) or more this month, about 5 degrees above normal, U.S. government data show. Corn, now in the pollination phase that creates kernels, risks damage above 32 degrees, said Cedric Weber, the head of market analysis at Bourges, France- based Offre et Demande Agricole, which advises farmers on sales. The heat wave in Europe is adding to concern about global food supplies as U.S. farmers face the worst drought since 1956, India delays sowing because of a late monsoon and Australian crops endure below-average rainfall. Soybeans and corn rose to all-time highs yesterday and wheat surged 42 percent since June 1.
The United Nations says food prices will probably rebound after falling the most in three years in the second quarter. “Everyone is looking to the U.S., but clearly in Europe we’ll need to import a lot of wheat and corn,” said Weber, whose company advises about 5,000 farmers. “That’s just adding to the problems we’ve got everywhere.”

Wheat futures end well off session lows(Source:CME)
Wheat futures finished 20- to 30-plus cents lower in most contracts at all three exchanges today, although far-deferred months posted losses in the teens. Wheat futures finished well off session lows, ending mid-range in most contracts. Wheat futures followed the lead of corn and soybean lower today. With spillover support that wheat had been riding to the upside gone, the market is without solid support, leaving futures vulnerable to selling pressure.

Wheat Market Recap Report(Source:CME)
September Wheat finished down 34 at 878 3/4, 35 1/2 off the high and 26 up from the low. December Wheat closed down 30 3/4 at 888 1/4. This was 24 up from the low and 31 1/2 off the high. September Chicago wheat traded sharply lower into the closing bell as pressure spilled over from the losses in the corn and soybean markets. Kansas City and Minneapolis wheat traded lower on the day. Technical and fund profit taking hit the wheat market as fund positions drew closer to record levels. Corn closed well off it's session lows which offered slight support to wheat after midday weather maps looked slightly warmer and drier in the western Corn Belt the next 5 days. The western Corn Belt saw above normal heat today and missed showers causing further stress to corn crops in Iowa and Nebraska. The 6-10 weather outlook shows another ridge setting up next week which will push heat into the Central Midwest again. Overall, the market feels very uncertain about the forecast going forward. Outside markets turned extremely negative today adding significant pressure to the commodity complex. Stocks traded lower for the 2nd day in a row and the US Dollar move sharply higher. September Oats closed down 18 at 362 1/2. This was 2 up from the low and 13 1/4 off the high.

Corn futures trade 40-cent limit lower (Source:CME)
September through May 2013 corn futures traded their 40-cent limit lower today, but this sparked a wave of late value buying, helping futures to settle well off their daily lows. September futures closed 24 cents lower, while deferred months pared losses to the single-digits on the close. Corn futures faced followthrough profit-taking pressure today as rains crossed the northern and eastern Corn Belt and the forecast calls for additional rain chances. However, recognition that the crop is in really tough shape (USDA rates it 45% "poor" to "very poor") and that at best rains would stabilize the crop encouraged some late value-buying.

Corn Market Recap for 7/24/2012 (Source:CME)
September Corn finished down 24 at 790, 25 1/2 off the high and 16 up from the low. December Corn closed down 7 1/4 at 778 1/4. This was 32 3/4 up from the low and 11 1/4 off the high. December corn traded lower into the closing bell but managed to settle well off it's session lows. The August and December contracts traded limit lower briefly midday but found support on a slightly warmer and drier weather forecast in the western Corn Belt the next 5 days. Traders took profits for the second day in a row on technical and fund selling. Storm systems passed through Wisconsin, northern Illinois, northern Indiana, and Ohio today which most likely benefited soybean growth during pod-setting. The western Corn Belt saw above normal heat today and missed showers causing further stress to corn crops in Iowa and Nebraska. The 6-10 weather outlook shows another ridge setting up next week which will push heat into the Central Midwest again. The eastern Corn Belt may see an increase in precipitation but accumulation is expected to be light. Overall, the market feels very uncertain about the forecast going forward. Outside markets turned extremely negative today as stocks traded lower for the 2nd day in a row and the US Dollar move sharply higher. September Rice finished down 0.27 at 15.18, 0.03 off the high and 0.03 up from the low.

US drought to cause food price spike but not inflation
WASHINGTON, July 23 (Reuters) - Americans face higher food prices at the supermarket because of a drought this summer, but the increase will not have a lasting impact on inflation or the Federal Reserve's thinking on monetary policy.
Corn and soybean prices on the futures market have surged to record highs amid the worst drought in half a century, with new crop contracts for corn rising 50 percent since early June and soybeans increasing about 35 percent.

GRAINS-US corn, soybeans extend losses on forecast for rains
SYDNEY, July 24 (Reuters) - Chicago corn slipped more than 2 percent and soybeans slid more than 3 percent, extending losses from the previous session, as forecasts of rain eased some worries about the U.S. drought and the euro zone debt crisis continued to weigh on risk assets.
"Overnight we saw a pretty heavy sell-off in all risk assets after the Spanish bonds hit record levels, which managed to spook the financial markets," Michael Creed, agribusiness economist at National Australia Bank said.

China sees good corn harvest, industry demand slows
BEIJING, July 24 (Reuters) - Good weather in China's corn regions has raised expectations that the world's second largest consumer will have a bumper September harvest, and slowing demand from the corn processing industry will also ease pressure on supplies, analysts said.
Anticipating a bumper harvest, some private Chinese feed mills are selling back some of the cargoes they imported in the first half of the year from suppliers in the United States, where drought has driven prices to an all-time high.

US corn, soy crop ratings fall further amid drought
July 23 (Reuters) - U.S. corn condition ratings have fallen for the seventh straight week, declining more than expected as the crop continues to wilt amid the worst drought in the United States in 56 years, government data showed on Monday.
The U.S. Agriculture Department's weekly crop condition report released on Monday afternoon also showed the state of the soybean crop falling closer to levels last hit 24 years ago during the 1988 drought.

Argentine grains inspectors call three-day pay strike
BUENOS AIRES, July 23 (Reuters) - Workers at Argentina's food and animal health agency will start a three-day pay strike on Wednesday, a protest that will disrupt soy and corn loading in grains ports, a union leader said on Monday.
Grains exporters in Argentina -- one of the world's biggest food suppliers -- require certificates from the Senasa agency inspectors before grains and byproducts such as soybean oil and meal can be loaded.

Argentina's small farmers eye alliance with union boss
BUENOS AIRES, July 23 (Reuters) - Small-scale growers in grain powerhouse Argentina are moving toward an alliance with the country's top labor boss in a bid to combat interventionist government policies that they say hurt farm profits and scare off investment.
The agricultural sector has long quarreled with President Cristina Fernandez, who won a landslide re-election nine months ago on vows she would keep strengthening the state's role in Latin America's third-biggest economy. She soon made good on her promise by nationalizing the country's biggest oil company.

India cuts monsoon expectations to below average
NEW DELHI, July 23 (Reuters) - India's crucial monsoon rains are now expected to be below average, the government said on Monday, turning to contingency plans as rainfall has been about a fifth below normal so far and recent rains have not been enough to ease concerns.
The monsoon lost momentum last week, falling 22 percent short of averages and raising the risk of a drought year in one of the world's leading producers of grains and sugar just as global prices hit record highs and domestic food prices soar.

Russia's grain exports seen gathering pace-analysts
MOSCOW, July 23 (Reuters) - The pace of Russia's grain exports is rising after a slow start to the 2012/13 season, despite record wheat prices which hit new highs last week and may rise further this week, Russian analysts said.
Wheat with 12.5 percent protein content was quoted at $310 per tonne in Russia's main deep-water ports last week -- a new record high, Dmitry Rylko, head of the Institute for Agricultural Market Studies (IKAR), told Reuters on Monday.

Some US crops get welcome drink amid devastating drought
CHICAGO, July 23 (Reuters) - Rain will fall early this week in the northern U.S. Midwest, with from 1 to 2 inches expected across a broad parched swath of corn and soybean land roughly north of Interstate 80, an agricultural meteorologist predicted Monday.
"It's good news and bad news today. The good is rain north of I-80 with widespread coverage and temperatures in the mid- to low 90s degrees Fahrenheit," said John Dee of Global Weather Monitoring.

Kazakhstan cuts grain crop forecast due to drought
ASTANA, July 23 (Reuters) - Kazakhstan cut its 2012 grain crop forecast to 12.8 million tonnes on Monday, approaching a post-Soviet record low, as drought persists across parts of the Central Asian country.
The Agriculture Ministry forecast average crop yields of less than 1 tonne per hectare as hot and dry weather damages crops across parts of its northern grain belt. The ministry had previously forecast a grain crop of 14 million tonnes this year.

Dry weather hits EU grain yield outlooks
MILAN, July 23 (Reuters) - Persistently dry and hot weather in southern and south east Europe has hit grain yields in Europe and adverse crop weather is expected there until the end of July, the European Commission's crop monitoring unit said on Monday.
"Europe will remain divided between the North, characterised by low temperatures and relatively wet conditions, and the South, where scalding temperatures will strike the Iberian Peninsula and the Black Sea Area," the unit, called MARS, said in its monthly yields update.

SOFTS-Sugar, coffee ease, focus on Spain bailout risks
LONDON, July 24 (Reuters) - Sugar and coffee futures on ICE eased in light volumes in early trade weighed by fears Spain would need a major bailout and as Moody's Investors Service changed its outlook for Germany and other top-rated euro zone economies.
Cocoa futures edged up as the market consolidated following mixed global grindings results this month, clouding the outlook for demand.

Thailand frees more sugar for export - millers
BANGKOK, July 24 (Reuters) - Thailand has cut by 100,000 tonnes the amount of sugar the government will set aside from the 2011/12 crop for domestic consumption, allowing millers to export more, a milling group said on Tuesday.
Setting aside 2.3 million tonnes of sugar for domestic use could mean that Thailand's exports will hit a record high of 7.9 million tonnes in 2012.

Brazil cane industry expects to make up lost time -Unica
SAO PAULO, July 23 (Reuters) - Brazil's center-south sugarcane industry, which accounts for 90 percent of the country's sugar output, estimates it will be able to recover the days of production lost in recent months to wet weather by the end of the season late in 2012.
Accounting for half of the world's sugar exports, Brazil has fallen behind in its production of sugar this season by nearly 3 million tonnes compared with last year at this time, due to heavy rains over the past months that have stopped mills from crushing the new crop, cane industry association Unica said.

Tanzania rain a big boost to coffee output
DAR ES SALAAM, July 23 (Reuters) - Tanzania expects its 2012/13 (June/April) coffee output to rise 72 percent to 55,000 tonnes, helped by good rainfall, regulator Tanzania Coffee Board (TCB) said on Monday.
Tanzania produced a little over 32,000 tonnes of coffee in the 2011/12 season, lower than a previous forecast of 45,000 tonnes due to drought.

Oil Falls From Two-Day High in New York as Crude Supplies Climb (Source:Bloomberg)
Oil dropped from the highest closing price in two days in New York after an industry report showed crude stockpiles increased for the first time in four weeks in the U.S., the world’s biggest consumer of the commodity. Futures slid as much as 0.7 percent after the American Petroleum Institute said supplies rose 1.35 million barrels last week. An Energy Department report today may show they declined 1 million barrels, according to a Bloomberg News survey before the API data. Prices also fell after Iranian and European Union officials met to establish common ground for another round of talks on the nuclear program that has prompted sanctions against the Middle East nation, OPEC’s second-biggest crude producer.
“We’re seeing a knee-jerk reaction to the prospect that things might be slowing down in the U.S.,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity-markets newsletter in Sydney. “Keep an eye on the Energy Department data. There’s a lot of negative sentiment creeping into the market.” Oil for September delivery slid as much as 65 cents to $87.85 a barrel in electronic trading on the New York Mercantile Exchange and was at $87.98 at 11:25 a.m. Sydney time. The contract yesterday climbed 0.4 percent to $88.50, the highest close since July 20. Prices are 11 percent lower this year.

OIL-Oil above $103 after China data; Europe weighs
LONDON, July 24 (Reuters) - Oil rose above $103 a barrel after China's economy showed signs of improvement, but gains were checked by further evidence of damage to Europe's economy.
"China is the biggest driver of oil demand and its overall oil appetite does not seem to have suffered so much, as it builds up infrastructure and crude stockpiles," said Tony Nunan, a Tokyo-based risk manager at Mitsubishi Corp.

China's June Iran oil imports at 11-mth high - customs
BEIJING, July 23 (Reuters) - China's crude oil imports from Iran rose to their highest in nearly a year in June despite tough Western sanctions targetting Iran's oil shipments.
The June import figures precede European Union sanctions, which came into effect on July 1 and which banned insurance firms from providing coverage for shipments of Iranian oil anywhere in the world.

Exxon May Lead Drop in Global Oil Profits on Lower Prices (Source:Bloomberg)
The world’s largest oil companies are poised to report a drop in second-quarter earnings after crude prices declined for the first time in three years. Exxon Mobil Corp. (XOM), the world’s biggest oil company by market value, will probably say tomorrow net income dropped 13 percent from a year earlier to $9.3 billion dollars, based on the average of five analysts’ estimates compiled by Bloomberg. Royal Dutch Shell Plc (RDSA), Europe’s top oil producer, is expected to see profit decline 4 percent after adjusting for certain gains and losses. “We expect earnings to be down and for companies to miss the current consensus,” said Jason Gammel, an analyst at Macquarie Capital Europe Ltd. in London. “The oil price is the single biggest factor, and U.S. gas prices were particularly anemic. The one area that looks good is refining margins.”
Brent crude futures, a benchmark oil price used by much of the world, fell 7 percent from a year earlier to average $108.76 a barrel in the second quarter, the first year-on-year decline since 2009 as economic growth slowed in China and concerns mounted that the European debt crisis will erode demand. Oversupplies from burgeoning shale-field output in the U.S. pushed natural-gas prices down 46 percent to average $2.354 per million British thermal units. Slumping prices more than offset gains in production, including the return of Libyan fields, and widening refining margins in the U.S. and Europe.

China to Flood Steel Market Hurting ArcelorMittal: Commodities (Source:Bloomberg)
China, the world’s biggest steel producer, is exporting at the highest level in two years, exacerbating a global glut that may hurt competitors from ArcelorMittal (MT) to U.S. Steel (X) Corp. Monthly shipments abroad rose to 8.7 percent of domestic output last month, the highest proportion since July 2010. Chinese steel mills, set for a record production in 2012, are ramping up overseas sales to avoid a softer domestic market, where prices for the commodity have dropped to a two-year low. ArcelorMittal of Luxembourg, which reports earnings today, and peers in developed markets are closing plants amid slower economies and lower prices. In contrast, Chinese Premier Wen Jiabao is overseeing a $23 billion investment in new mills to stimulate automaking and housing to reignite growth that fell in the second quarter to the slowest in three years. The strategy already is sparking unfair-trade charges by Western rivals.
“Increased Chinese exports take sales directly away from American producers,” Alan Price of Wiley Rein LLP, which acts as the trade attorney for Nucor Corp. (NUE), the largest U.S. steelmaker by market value, said in an e-mail response to questions. “It is highly likely that current Chinese exports across a range of products are being dumped.”

LME Shareholders Poised to Vote on HKEx’s $2.2 Billion Takeover (Source:Bloomberg)
JPMorgan Chase & Co. (JPM), Goldman Sachs Group Inc. (GS) and other London Metal Exchange shareholders vote today on a takeover by Hong Kong Exchanges & Clearing Ltd., after a nine-month contest that ended with a $2.2 billion bid. The LME’s board backed the proposal June 15 after offers from rivals including CME Group Inc. (CME), Intercontinental Exchange Inc. and NYSE Euronext. (NYX) The meeting in London is scheduled to start at 9 a.m. The proposal needs the backing of more than 50 percent of shareholders and owners controlling at least 75 percent of the stock in the 135-year-old exchange. At stake is a bourse handling more than 80 percent of world trade in industrial-metal futures, setting global prices for metals from copper to aluminum to nickel. It would be the first overseas acquisition for Hong Kong Exchanges, the world’s second-biggest exchange by market value, and its first contracts in commodities. LME members may get more access to China, which consumes more metal than any other nation.
“It’s a historic milestone for the exchange,” said Michael Turek, a senior vice president at Newedge USA LLC in New York, who started in metals almost four decades ago. “I sense from some other people I talk to that there is an allure of being associated with a more robust growth area in the world at this time.”

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